Since the global economy is so volatile, financial markets are often negatively affected as supply chains frequently change operations, leaving many business owners struggling to keep up—ultimately resulting in unstable cash flow. All these lead to massive losses and ultimate business closure. That’s why in times of crisis, if you want your business to survive, be proactive and protect your finances.
Here are different ways you can protect your business’s finances during a crisis.
Focus on Data Security
Besides protecting traditional assets, you need to focus on protecting your data. It’s hugely crucial in most modern business today—with the Department of Defense releasing a new requirement called the Cybersecurity Maturity Model Certification or CMMC by DoD, advocating the importance of cybersecurity in today’s businesses. After all, data helps business owners get a detailed insight into what their business needs to improve, where to focus, and how to market to clients.
However, regardless of how businesses use their data, they need to safeguard everything. These include a client’s credit card details, email lists to employee information, and intellectual property. Business owners may also need to have several security measures to protect Wi-Fi network information and your “personal” details. Having additional security protocols is also ideal as it dictates which employees can access what, how they can access it, and where they can use it.
However, most importantly, you need to have a plan on how to respond to potential data breaches and other cyberattacks to minimize damage, protecting your reputation, clients, and finances.
Protect Relationships With Your Suppliers
Whether you run a manufacturing business or retail shop, you’ll likely handle products, manage inventory, parts, and supplies from different companies, and to ensure you get the best bang off your buck—you need to maintain good standings with them. If you fail to pay your suppliers on time or in full, they’ll eventually end the relationship. Plus, in some cases, bad relationships with your suppliers may ruin your overall brand’s image, making it challenging to establish new relationships and keep business running.
Remember that no business can keep going without suppliers, so you need to stay on top with invoices and continually maintain the relationship, securing a business’s finances long-term.
Protect Your Liability
Several countries have become litigious in the last couple of years, and as a business owner, you can’t take the risk of having someone sue you and force your business to close down and lose your finances and profits. A great way to protect your business’s finances is by purchasing the right insurance policies. Although the best policies vary per business, most business owners should get liability coverage to protect them from paying expensive lawsuits from customers and employees alike.
Safeguard Cash Reserves
When protecting business finances, you need to secure your cash because many consumers still prefer to pay using actual money despite online payments becoming more common. Plus, unlike electronic payments, cash can’t get hacked. However, it can be slipped into pockets and carried off without a trace, and when your workers carry cash deposits, they’re at risk of getting robbed—placing your employees and profit in danger.
That’s why most business owners today invest in smart safes to eliminate accounting errors, reduce the risks of getting robbed, and streamline back-office processes by counting the money directly from the cashier’s draw and preparing bank deposits. Additionally, when you need to move some of your profit to the bank, hire an armored car to ensure its safety.
Understand Your Business’s Cash Flow Cycle
A business’s cash cycle is the duration where leads enter your business, become a client, and make their first purchases. Although the number of days defining cash cycles varies per industry, your aim should always be to reduce the number of days from start to finish in the cash flow cycle. Doing this helps you become more efficient in managing your finances—protecting your business from huge losses.
There are two ways to protect your cash flow during unstable economic times or a full-blown crisis. The first one is to simplify processes to guide clients through the buying and implementation cycle of your products or services, and the second is setting payment terms for clients to make.
As a business owner, besides safeguarding your service and product quality and brand image, you also need to consider what goes behind the scene regarding your finances to ensure you have steady cash flow even during a crisis. Without protecting your finances, your business can’t grow nor achieve success, so consider the tips mentioned to safeguard your finances and earn more profit long-term.